Turkiye: Ferrous scrap prices increase w-o-w; supply sentiments improve amid Indian bulk enquiries

The week has been somewhat dull for the Turkish imported scrap market, with commercial activity just modestly getting ramped up in the middle of the week. Scrap collectors are striving for more price increases after successfully achieving higher pricing. The small improvement in the supplier-side market in Europe and the US is credited by market participants as the cause of this price correction.

There have been a few deals involving scrap of European origin this week, including HMS (80:20) at $352/t and shredded scrap at $377/t. Strong demand from India contributes to the likelihood that import prices will keep rising.

Prices for bulk HMS 1&2 (80:20) of US origin have increased by $5/t w-o-w to $355/t CFR, down by $20/t from values of $375/t a month ago. According to SteelMint data, rebar prices have also decreased by $5/t w-o-w, narrowing the gap between scrap and rebar pricing to $193-195/t.

While offers for material of US origin are still being shared at prices above $360/t CFR, the indicated near-term trading value for HMS (80:20) is presently above $370/t CFR. Due to the weak rebar demand, mills may find it difficult to buy scrap at $360/t CFR. It is still interesting to see what the highest offer is that can be accepted.

Since the beginning of 2023, the Turkish lira has declined significantly, falling from 18.62 in early January to above 27, a decline of nearly 69%. This significant cost increase has lowered market demand.

SteelMint's price assessment for US-origin bulk HMS (80:20) scrap stood at $355/t CFR Turkiye, slightly up by $5/t w-o-w

Recent deals:

• A Mediterranean-based mill secured a European bulk cargo of HMS (80:20) and shredded scrap at $352/t and $377/ respectively CFR Iskenderun.
  
  
• Another deal involved a West Marmara-based steel mill booking a Europe-origin scrap cargo containing HMS (80:20) at $352/t.
  
  
• An unconfirmed transaction reports a Mediterranean-based mill capturing another Europe-origin cargo with HMS (80:20) at $355/t CFR Iskenderun.
  
  

Domestic market Overview

In the domestic market, there is a minor upward movement primarily due to high production costs, as demand remains insufficient. Overseas scrap collectors are firm in their price policy, putting pressure on producer margins.

Given the increased imports and limited domestic demand, there are rumours that Turkiye may adopt a tougher import trading regulation for Iranian rebar.

Prices of domestic rebar in Turkiye have fluctuated. While other producers elected to raise their pricing because of high expenses, integrated mill Kardemir reduced its rebar prices to boost demand.

Auto sector: Toyota Motor Manufacturing Turkiye intends to halt production for annual maintenance, following other regional manufacturers, including Tofas and Ford Otosan. The steel industry is not anticipated to be considerably impacted by this action. Toyota contributed more than 13% of the Turkish car industry's output in H12023 by producing 101,123 vehicles.

OYAK witness weaker H1: An important steel producer in Turkiye, OYAK Mining Metallurgy Group, reported poorer financial and operating performance for the first half of 2023, which were partially caused by severe earthquakes. During this time, the company concentrated on domestic operations due to market challenges and the rising need for steel products for regional restoration projects.

Slab imports increase in H1: In H12023, Turkish flat steel producers increased slab imports, with Russia remaining a leading supplier. Despite a drop in June figures, Turkiye continued to diversify its semis sources, including some new sources that appear to be rebranded Russian products.

Outlook
Looking ahead, the Turkish scrap market is expected to maintain its upward trajectory, driven by factors such as strong Indian demand and supplier-side market dynamics. However, challenges due to currency depreciation and varying movements in the domestic market and trade flow with sluggish demand might continue.